6 March, 2008

Apple TV re enters the video rental market

Apple is trying to enter (for the second time) in a high profitable market: movie and video rentals via internet.

It’s not the first try and it’s not the first company doing this, but the fact that the maker of the very fashionable iPod & iPhone is focusing on video rental is particularly interesting.

ANALYSIS

Apple is becoming (like Microsoft and Sony) a multi-product electronic company (well, it still lacks some serious attempt to enter the gaming scene), and its business model is becoming more structured.

From Apple Computers, the company profits from hardware high margins (bundle software is not that important unless Apple buys Adobe or some other big sw giant), iPod gives nice revenues both from the hardware and the iTunes music downloads (4 billions songs downloaded in the last few years) and iPhone is more a revenue sharing product (with Telecom companies as partners) than a high margin hot selling hardware gadget.

Now what?

They start renting videos (well, they started one year ago, but we can say it hasn’t been a huge success) for few bucks a piece.

Let’s take a short break and see how things are developing for consumers and businesses.

Why video internet rental is a (potential) huge market:

– broadband is everywhere (and becoming a commodity)

– people prefer on-demand video (watch what you want, where you want, on the device you choose and when you want it!)

– TVs are becoming large video walls (and 32″ to 42″ lcd TVs where last Christmas top priority for families)

How is the Film industry changing:

– Movie companies executives don’t want to make the same mistake made by their colleagues in the music sector

– new media equals new revenues, so why don’t you try to exploit that?

– if you don’t do it, your competitor will!

– you have the product, now let’s start unpacking and sell it through the most possible wide area of different devices, markets

Apple signed an agreement with almost every big movie company, and even if we haven’t been able to examine figures for that agreement, we still believe it made some good deals.

OPINION

The next future will prove if Apple is right, but it seems that as more and more companies are entering into this (plenty of competitors) market, Apple with is unique hardware-software-users platform has a big competitive advantage.